>> thank you. >> ladies and gentlemen of the general assembly, constitutional officers and my fellow south carolinians, this and every year, we'll continue the tradition that recognizes the certain truths that he everything we

have in this state and this nation, we owe first and foremost to the men and women in uniform who bravely serve on our behalf. [ applause ] please join me as we pay tribute to those who gave the last full measure of devotion in the service of their state and country this past year. chief david lee crenshaw. pendleton. sergeant channing b. hicks, greer. sergeant john d. meador ii, columbia. first lieutenant ryan d. rawl, lexington. master corporal sandra sandy

rogers, aiken. private first class adam c. ross, lyman. sergeant first class, matthew b. thomas, travelers rest. on behalf of all south carolinians to their families, know that we will never forget. [ applause ] we love and respect our men and women in uniform here in south carolina. a few things make me as proud as the level of patriotism that just radiates off our state and her people. when i make that call to the families who just lost a loved one, i promised them the people of south carolina will wrap their arms around them.

may god continue to bless you and your volunteers for their service. [ applause ]

we have another very special guest with us tonight, a hard core rock star. brigadier general lori reynolds. the commanding general of one of the greatest military institutions that's ever existed. the marine corps recruit depot parris island. if you don't believe me, tour it yourself. but take mid a vice, don't mess with this general. the marine corps has been there since 1815 and has trained there for every major conflict of the 20th and 21st centuries. we're so proud of our marine corps, so proud that the most impressive marine training facility in the world is located right here in south carolina. and so proud that general lori reynolds now calls the palmetto state home. thank you, general.

i now ask that you indulge me in a brief moment of personal privilege. when we, as a family, started this administration, one of the biggest challenges was moving into a house that was more than anything, a museum, a wonderful, beautiful, historic building but a museum nonetheless. and so, as a mom, my biggest challenge was to make that house into a home for all of us. we were blessed to have a mansion family that welcomed us and understood the games our kids would play by putting wigs on statues and playing jokes on the staff constantly. we love them all. there was one person that blessed our lives in a way that no one else could. he did the same for the hodges and the sanford families. he did the same for many of you. chamberlain branch became a staple of the residence. not for his job but for who

he was. he greeted many of you and other south carolinians in a way that was godly and unforgettable. he made everyone feel special and welcome. most importantly, to this mom, he was the person my children couldn't wait to see when they got home and the one who truly turned that house into a home for us. our family was blessed by his unselfish kindness to our children and everyone he came in contact with. by now, you all know that chamberlain was tragically killed in december and our hearts remain broken. chamberlain has three young children, chyann, chaniya who were staples running averaged the house and we're blessed to have us tonight, his amazing wife, cherisse. please join us and the hodges and sanford families in recognizing cherisse and saying to chamberlain, one of the kindest best men we ever knew that while you will forever be missed, you

will never be forgotten. cherisse? [ applause ]

we've, through lillian koller and the department of social services, moved more than 14,000 families from welfare to work. we've created an agribusiness partnership to showcase the largest industry in our state. we've been awarded, for the second consecutive year, a gold shovel in recognition of our economic development successes. we've been ranked as the second best state in the nation as a place to do business. but as secretary hitt knows, we aren't going

to stop until we're first. we've announced $5 billion in foreign investment. and we've seen no less an authority than the wall street journal say that, "anyone still thinking the u.s. has lost its manufacturing chops hasn't been to south carolina." south carolina is truly becoming the "it" state when it comes to economic development and job creation not just in the united states, but worldwide. with us tonight are a number of people who are proof positive that what we are doing is working, and i'd like to ask you to help me welcome these wonderful friends of south carolina. to those whose names i call, please stand and remain standing. and please hold your applause until the end.

- representing 500 jobs in anderson and lexington counties, from michelin north america, inc., richard kornacki

and that with the business community as our biggest cheerleaders, there is nothing we can't accomplish in the great state of south carolina.

third, we have to address our crumbling infrastructure. our roads, our bridges, they simply aren't up to standard. more than 1,000 of south carolina's bridges are either load-restricted or structurally deficient. first and foremost, it is a public safety issue. the citizens of south carolina deserve to drive on roads that aren't littered with potholes and on bridges that they know won't fall down. it is a core function of government. but it is also an economic development issue. south carolina has announced ourselves as the new superstar of american manufacturing. we build things. we build planes. we build cars. we build tires. we build more atvs than anywhere else in the world. we need roads and bridges that match the quality of the companies that manufacture in our great state. and we will get them. but i will not, not now, not

ever support raising the gas tax. [ applause ] the answer to our infrastructure problems is not to tax our people more. it is so spend their money smarter. why would we raise the gas tax to improve infrastructure when all of the gas tax dollars we currently collect don't go to improving our infrastructure now. millions of dollars each year in our gas tax revenue are being diverted away from our bridges and our highways. let's change that. and then let's invest more of the money we already have into this vital area. every year you hear me talk about the money tree that falls during session whereby new dollars appear above and beyond what was available whin we balanced our budget in december and january. let's prioritize that money differently this year. we've's released an executive budget that is balanced. funds the core function of government.

strengthens underfunded needs like mental health and law enforcement and identifies money for road and bridge improvements. let's follow that blueprint. we can make our state safer and our business climate can be more dynamic. with us today is warden mike mccall. one of the unsung heroes of south carolina state government. warden mccall runs lee correctional institution. one of our most dangerous, seeing the west of the west of our convicts. as a legislator, it was always my belief giving money to corrections was giving money to criminals. and that there were better, more noble places to put our tax dollars. warden mccall will tell you that's not true. twice in the past year, the warden has had the prisoners take control of parts of his prison. he has seen one of his guards, kevin doyle, viciously beaten and left for dead in a janitor's closet. yet lee correctional has no towers, no wands and few

cameras. i've been there. i've seen it. warden mccall will tell you that if we give money to his facility, it's not going to prisoners. it's going to guards. and that, for them, is a matter of life or death. join me in thanking warden mike mccall and join me this budget year in helping to keep him and all of our prison guards safe and secure. warden? [ applause ] of course we can't talk about security in south carolina without talking about the department of revenue and the protection of the personal data of the people of our state. plenty has been said and writ been the international criminal hacking that took place at dor. i'm not here to rehash that or look backwards except to

say this... when it comes to data security, the state of south carolina should have done better and will do better in the future. that does not mean we'll be 100% protected. the toughest lesson i've learned is that in today's world, there is no such thing as an solute security. that's true for conventional terrorism and homeland security threats and it is true for cyberterrorism and cybersecurity threats. it is a hard reality. but reality nonetheless. what it does mean is that we'll do everything we can to make sure that no state in the country has better security measures in place than we do. already we have taken a number of steps in that direction at the department of revenue. we are encrypting all personal and sensitive data. this month, we'll have completed implementation of two factor identification for dor employees. we are segments our networks to make sure that our most sensitive information is protected separately and

securely. we have created a security council within the department, a team of professionals that will meet regularly to discuss the state of our security in this changing world and constantly update our processes. by the end of this process, the department of revenue's data will be as secure as any in the private or public sector. but it's not just dor that requires our attention. in october, i asked inspector general pat maley to review the i. t. standards in our state government. his report made clear the following. while cybersecurity policies were carried out on nearly a daily basis in almost every agency, south carolina lacks a single entity with the authority necessary to better secure our systems. we must fix that. we must fix it this year. i have also directed every single cabinet agency to work with our state i.t. department and make sure 24 hours a day, seven days a week, 52 weeks a year, our

systems will be watched. these measures are not cost-free but they are necessary and i want to thank chairman leatherman and white for their help in enabling the state to respond forcefully to this attack. i ask you tonight to ensure it is not just cabinet agencies but every agency in state government that's working with our state i.t. department to provide our citizens the security they deserve. to date, more than 1.1 million south carolinians have signed up for credit protection either through experian or through dun & bradstreet. they're good, honorable companies who will help keep our information protected and at the same time, be respectful to the citizens of south carolina who have turned to them in this time of need to. every south carolinian watching tonight, let me say this, if you have not signed up yet for protection, if your parents have not signed up for protection, if your friends or your coworkers or your neighbors or your

siblings have not signed up for protection, please urge them to do so. it is so important. please visit www.protectmyid.com/scdor. use the activation code scdor123. there is no question what happened at the department of revenue was a jolt to all of us. my pledge to the people of our state is that with all crises, all challenges, we will do everything in our power to come out stronger than before. we've come now to the part of the evening that may feel to some of you like deja vu. restructuring. few of us would deny our government structure is outdated, broken and does not well serve the citizens of south carolina. every year, governors as far back as dick riley have stood before you and pledged to bring -- pleaded to bring our government into the modern era. every year, it feels like we end up in the same place,

preaching the same things, facing the same obstac ams. this year, i want to keep it simple. two critical changes to the way south carolina is structured. first, our department of education. last year, for the first time ever, the house passed a bill that would allow governors to appoint the superintendent of education. i cannot overstate how important this change is. and all we're asking is that we give the voters the opportunity at the ballot box to make this constitutional change. general zais supports it. the south carolina house of representatives supports it. and i believe that if given the opportunity, the people of south carolina will support it at the ballot box. let's give them that opportunity. they deserve it. [ applause ] now to the department of

administration. each of the last two years, i've made the argument as to why ridding our state of the big, green monster that is the budget control board would move south carolina forward. some of you like senators larry martin and shane massey have made that argument with me. i believe most of you know it is the right thing to do. instead, i will make this observation. if one came to south carolina from another state or country and saw the way the department of administration bill was handled last year, he or she would surely be confused. the senate unanimously voted in favor of it. a large majority in the house voted for it and still, it didn't pass. how is that possible one might wonder. how did the senate not even take a final vote on that day on the final day? that's not the way our system is supposed to work.

to that, i will say this. i wish a warm welcome to all the newly-elected members of the house and senate. but i want to extend a special welcome to the new senator from lexington county, katrina shealy. [ applause ] senator shealy represents one less excuse for those who don't want to change the wasteful way state government operates. there are month more excuses left. let's pass the department of administration and let's pass it this year. unfortunately our structure of government isn't the only place south carolina lags behind the rest of the country. in recent years, there's become a palpable sense among the people of our state that something is fundamentally wrong with the way many elected officials

have conducted themselves. in some ways, that sense is unfounded. the vast majority of our elected officials are honest and honorable people. but in other ways, the public's unease is fully justified. for too long, votes weren't being recorded. hundreds of would-be challengers were thrown off the electoral ballot while incumbents skated by untouched. people by in large believed that south carolina government is set up in a way that serves the public officials of our state rather than the other way around. we have made some progress over the last year starting with the passage of a bill that, for the first time ever, requires that every single vote on the floor of the general assembly be on the record.

we got an f for our public's access to information. we got an f for our state budget process. we got an f in nine of the 14 categories they considered. ef single one of us knows that's not good enough. the people of south carolina deserve better. that's our responsibility. no, that is our obligation to give it to them. almost exclusively governs yous, we should not be deciding alone what those changes look like. our ethical standards should be determined not by those inside the capital but by those who have no stake in our rules. that's why in october, i created a panel. the panel includes former prosecutors. it includes former members of our ethics commission.

it includes former legislators. it includes members of the press. it includes appointees made from each of your bodies. it includes democrats and republicans. most importantly, it is made up of people who had nothing to gain from their participation other than the satisfaction of moving south carolina forward. rarely has such a talented and diverse group of people got together and worked so quickly, so meticulously, so diligently toward a task at hand. while every member of the south carolina ethics reform commission deserves our thanks and praise, the cochairs of the commission are here with us this evening. and i ask you to join me in recognizing two wonderful statesmen. two former attorneys general travis medlock and henry mcmaster. [ applause ]

they have thrown themselves into this process that gives me great hope for the recommendations they'll deliver to us within the next two weeks. they have been thorough, taking testimony and gathering research from those within the system as well as those outside of it. and i have every faith that their recommendations will make south carolina stronger. our citizens must have confidence in how we do our jobs. that confidence will come from adopting the recommendation of this bipartisan professional and unbiased group of experts. our citizens deserve no less. and we should accept no less. now -- [ applause ] now, let's talk about health. for all the debate we will have over healthcare in the coming legislative session, i believe we all agree that

we want and need a healthier south carolina. and no one can deny that this administration, working with legislators like representative murrell smith and senator thomas alexander has made health a priority. we started 2011 with the medicaid budget out of balance and we brought it under control. we started with one of the lowest rates of insured children in the country and now south carolina is recognized for adopting leading edge strategies to reach more children. we started with mental health and addictive disorder programs, hobbled by cuts and together we've reinvested in both. we started with a medicaid program that required little accountability for quality or cost and we've demanded better value. these are success we should celebrate. but let us ask a simple question. are taxpayers getting the most health for the money they spend on healthcare? my answer is no. not by a long shot. we spend more money for

health services per person than any nation on earth. year after year, we devote a larger and larger portion of our paychecks, our payrolls, our state and federal budgets to healthcare services. maybe we wouldn't worry about all of the spending in our outcomes were better but they aren't. the united states is falling behind the rest of the world in infant mortality and life expectancy and here in south carolina, we have one of the lowest life expectancies and highest infant mortality rates in the u.s. with such high costs and such poor outcomes, why would we throw more money at the system without first demanding improved efficiency, quality and accessibility? the affordable care act known as obamacare says expand first. we'll worry about the rest later. connecticut expanded early under obamacare and just reported $190 million medicaid deficit in spite of subjecting their citizens to a massive tax increase.

california just raised taxes in part to cover their medicaid deficit and yet needs $350 million more to pay for obamacare next year. that's not us. that's not south carolina. the federal government likes to wave around a $9 match like it is a silver bullet. some extraordinary benefit that we can't pass up. but what good do the $9 do us when we can't come up with the $1? what good are any dollars when they come through a program that doesn't allow us the flexibility to make the decisions that are in the best interest of the people of south carolina? in the end, i cannot support this expansion for a very simple reason. it avoideds addressing our healthcare system's high cost and poor outcomes. as long as i'm governor of south carolina, i will not implement the public policy disaster that is obamacare's medicaid expansion. [ applause ]

instead, we need to improve healthcare values and we will. we are taking a lead in payment reform. this year alone, over $40 million of payments are tied to performance which means better outcomes for medicaid patients and south carolina taxpayers. we're asking medicaid beneficiaries to become more engaged in their health. if a patient doesn't follow a doctor's advice to stop smoking or doesn't take their medication as prescribed, we end up spending more money than necessary and more importantly, they'll never get healthy. we have to improve patient engagement and stop rewarding bad behavior. and we're working on hot spots of health. we've already reduced harmful early elected deliveries by half. we're one of the first states in the nation to no longer pay for this poor practice. we're investing in rural

health because if you have medicaid and live in marlboro or bamberg, it is likely you aren't as healthy as if you had medicaid and live in greenville or lexington. this is true for reasons that go far beyond healthcare. but that doesn't mean we can't implement changes that make a difference. we have long known the rural hospitals face challenges that larger hospitals don't and now for the first time ever, the state of south carolina is going to treat them that way. health and human services now pays rural hospitals differently from urban hospitals. and starting next year, we plan to fully reimburse rural hospitals for their uncompensated care. this isn't new money. but money shifted from areas where we don't need it less or where we need it less to where we need it more. and we will continue to get creative as we work to improve health in the parts of south carolina that have, for too long, been pushed aside. as we go forward together through this debate on

health, i ask that we keep the following in mind. first, health and well-being is ultimately driven by income, education, personal choices, genetics and support from family and community. second, when south carolina says we're going to do something, we have to do it well. and if we have -- we will pay for it. we can't promise expanded medicaid but cut reimbursement so low that doctors won't see medicaid patients. we can't promise expanded medicaid while we continue to underfund mental health. we can't promise expanded medicaid while maintaining waiting lists for services. we need to meet our current commitments before we promise more. third, there is enough money in our public and private healthcare system today to make the system work. we can't spend our way out of this problem. that's too easy in the short term and too painful in the long-term. the next three years is an extremely risky time for our state. budget and our health system. and while it may be easier

to take the federal money and figure out how to pay for it later, i'm not willing to commit us to a shortsighted decision we will not be able to back away from. instead of expanding a broken program, we will continue working together to implement real health solutions for south carolinians. a health system that delivers the highest value will be able to thrive regardless of what the future throws at us. finally tonight, let's talk about education. first, it would be wrong to have a discussion about education without first remembering the victims of the tragedy at sandy hook elementary school. please join me in a moment of silence. thank you. in south carolina, we have done some useful things on education in the last couple of years. we've reaffirmed our commitment to charter

schools. we've invested innovation with the focus on both rural and urban areas through programs like teach for america. general zais has pushed the federal government for more flexibility to manage and evaluate our schools and educators and he won. so we've seen some progress but our state still has a long, long way to go. there is no surer path out of poverty and toward equality of life than having a good education. but it's it's not only that. having a well-educated work force is a real factor in attracting more businesses and jobs to our state. there is a real economic element to improving education as well. i know there are some strong school choice bills that are making their way through the general assembly and as i've always said, i support school choice. it will be good for the parents and children in our state to be able to make their own family decisions and it should have happened a long time ago. but i have never been one who believes that choice is the only way to improve

education. it is one way. a truly important way but we have to do other things as well. tonight, i want to start a conversation about the way we fund k-12 schools in south carolina. i say i want to start a conversation for two reasons. number one, i'm not by nature a patient person. but i know from painful experience that the general assembly is a body that does not often move quickly. so i figure let's start with a constructive conversation rather than a controversial piece of legislation and let's see where that takes us. number two, i know that when we start to talk about how we fund our schools, a lot of people can get really nervous really quickly. so let's take this calmly and just start with a conversation. as we all know, sometimes conversations lead to more. my starting point for this conversation is personal. michael and i are the proud parents of two children in lexington county public schools.

i am grateful every day that my children attend public schools where the teachers are exceptional. where the facilities are first class. and they walk through the halls with the sense of opportunity and hope for the future that pulsates through the classrooms and hallways. but let's be honest in this conversation. what i'm describing is not what schools in all parts of our state have. i grew up in bamberg, going to school in a brick box. my education was wonderful because of very special teachers. but when it came to resources, we didn't know what we didn't have. i know what it's like in bamberg and in other rural and poorer areas of our state. i am not one who believes that more money is the answer to our education problems. there are other, bigger factors including poverty and broken families. but the amount of money that actually touches a teacher and student in the classroom is without a doubt a factor in the differences between those schools and between

the education that those children receive. now here's the tricky part. we must not do anything that undermines the quality of our schools whether it be in lexington or greenville or any economically vibrant part of our state. the parents of those students pay their taxes that fund their education and i will play no part in diminishing the return they receive. but we do have to figure out a better way to bring up the schools in the poorer parts of our state. and history shows that we cannot count on their own depressed local tax bases and restrictive federal dollars to do it. we need to spend our dollars smarter. we need to be more accountable. and we need to better serve all the children in south carolina. so i want to start a conversation. i want to start it with three distinguished members of this general assembly. the first two are senator john courson and representative phil owens, respectively chairmen of the senate and house education committee.

the third person i want to reach out to for that conversation is senator nikki setzler. senator setzler and i have had some differences. that's okay. that's politics. but i respect his commitment to public education. i know he shares my interest in keeping our lexington county schools as great as they are and as the the newly-elected senate democratic leader, i know he and his caucus have at heart the areas of our state that are in the most need of attention on dedication. senators courson and setzler and representative owens, i invite you to join me. i'm convinced we can change our policies and improve education quality for all of our children. but i'm also convinced that we can't do that without touching some sensitive topics and without bipartisan support and consensus from all parts of our state, let us begin that conversation. this new year, i've found myself reflecting on the last two. i came into office wanting

to make changes that move us forward in a way that people could feel it in their homes and businesses. we've had some great success together. whether they be job announcements, taking our pension system from the red to the black, reducing taxes, fighting to protect boeing from the federal government or creating an office of inspector general. in the same vein, we've had some challenges. watching a two-queer restructuring effort fall in the senate on the last hour. learning firsthand what businesses have been fighting for years as criminal hackers targeted our state or watching with frustration as both parties in washington are unable to find resolutions that help states but instead place further burdens on them. i came away from these reflections very optimistic because i know what we have in south carolina and i know what we're capable of when we work together. i know that we have added over 31,000 new jobs in south carolina because we've acted as a team from the county level to the economic

development alliances, to the state. the success we've had in the jobs arena shows what can happen when there is a willingness to work together. the challenges of when we lose, focus on the issues and the finger pointing begins. my goal is to continue to strive for a positive environment that produces results. i ask that you join me in improving proving to the people of south carolina that we are and will be more productive this year. we won't always agree but we should always be willing to respectfully work towards a resolution for the good of the state. the people of our state have enough challenges and they deserve the satisfaction of knowing that columbia is working for them. we have a choice this year. we can spend our time playing politics. we can snipe at each other. we can use the pulpits we all have access to, whether it is the wealth of the distinguished bodies, the microphones on top of a podium to score political points. but i believe our state deserves better.

i believe this is the year we can make the people of south carolina proud. by giving them successes on restructuring, on tax relief, on regulatory reform, on strengthening protections in cybersecurity. on healthcare. on education and on raising the bar on the ethics of public officials. it's a great day in south carolina. but it will only continue if we make it so. i, for one, look forward to the fingers going down and the hand shakes of celebration beginning. thank you, god bless you and may he continue to bless the great state of south carolina.

>> first ladies, influence and image, public and private lives, interests and their influence on the president. over 40 for administrations. produce with the white house a struggle association, season one begins president day. >> and now to london for prime minister's question time live from the british house of commons. every wednesday while parliament is in session prime minister david cameron takes questions from members of ho